In the 1960s, the U.S. experienced ongoing inflation. What was the main cause of this inflation?
a. The economy's self-correcting mechanism was allowed to operate.
b. The Federal Reserve maintained an output target.
c. The Federal Reserve increased the money supply in response to positive demand shocks.
d. The Federal Reserve pursued an active monetary policy.
e. The Federal Reserve increased the money supply in response to negative demand shocks.
C
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The government borrows money to cover budget deficits by
A) purchasing bonds. B) petitioning the International Monetary Fund. C) selling bonds. D) filling out a loan application at Citibank.
In the figure above, using the midpoint method, what is the price elasticity of demand between points A and B?
A) 0.05 B) 0.13 C) 0.43 D) 1.00 E) 2.33
The value of money rises as the price level
a. rises, because the number of dollars needed to buy a representative basket of goods rises. b. rises, because the number of dollars needed to buy a representative basket of goods falls. c. falls, because the number of dollars needed to buy a representative basket of goods rises. d. falls, because the number of dollars needed to buy a representative basket of goods falls.
The term equilibrium refers to the point where:
A. buyers and sellers "agree" on the quantity of a good they are willing to exchange at all prices. B. quantity supplied equals quantity demanded. C. every buyer and seller achieves their best possible outcome. D. the supply curve and demand curve do not intersect.